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FairfaxReal EstateSurvey: Local residents need to work slightly longer to pay rent

Survey: Local residents need to work slightly longer to pay rent

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An American making an average wage needs to work about 63 hours before earning enough to pay the typical monthly U.S. rent. That is three hours more than they would have needed to work a year ago, and six hours more than before the pandemic in October 2019, a new Zillow analysis finds.

In the Washington area, however, wage growth has (almost) kept up with rent-price growth over the past years, so a typical renter only has to work an additional 66 minutes per month – bringing it to about 56.3 hours total – to afford the difference.

Big or small, rental housing is taking a bite out of monthly income.

“The rental market has cooled this year, but so far that has meant prices growing more slowly, not any real relief for renters,” said Jeff Tucker, senior economist at Zillow.

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“Rents were growing at a record pace for much of 2021, squeezing budgets for renters moving or renewing leases,” Tucker said. “Now, it appears more people are opting to double up with roommates or family, which means more vacancies and pressure on landlords to price their units competitively, offering some hope of relief on the horizon.”

The typical U.S. rent finally ended a two-year streak of nonstop growth in October, falling 0.1 percent month-over-month to $2,040. Annual rent growth peaked at a record 17.1 percent in February, and has since slowed to 9.6 percent year-over-year growth – albeit from a higher base.

In the Washington region, rent has risen 20.1 percent in five years while average wages are up 17.8 percent, according to Zillow’s calculations.

Renters in Miami face the greatest affordability hurdles, needing to work 96 hours at the average wage to pay the typical rent. That is 24 hours more than Miami renters would have needed to work to pay rent five years ago, the biggest gap among the 50 largest U.S. metro areas.

Other Sun Belt markets – the hottest housing region during the pandemic – have seen similarly large jumps in hours of work needed to pay rent. An average worker in Tampa would need to work an additional 20 hours to pay rent compared to five years ago. Phoenix rents are up 66.7 percent since 2017, the most in the country among large markets, and renters need to work 17 hours more to pay rent.

Even after steep rent hikes, hours of work needed to afford rent remain below the national average of 63 hours in several Sun Belt markets. This includes Atlanta (61 hours), Phoenix (61 hours), Nashville (60 hours) and Austin (58 hours), among others.

While longtime residents will see a much different picture than they may have been used to, these markets still offer relative affordability and are likely to continue to attract residents from more expensive areas of the country.

Rents have gotten easier to pay over the past five years in only three large metros, and they are among the most expensive in the country: San Jose, Boston and San Francisco. Rents have grown more slowly than average in these markets, helping wages catch up just a bit.

Even with the slight drop, though, the average person would need to work more hours to pay rent than the national average in each of these markets – 72.7 hours in San Francisco, 66.3 hours in San Jose and 64.7 hours in Boston.

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